When the Price of Bread Increases by 5 Per Cent

question 37

Multiple Choice

When the price of bread increases by 5 per cent, the quantity demanded of crackers increases by 2 per cent. The cross elasticity of demand between crackers and bread is:

• A) 0.67.
• B) 1.5.
• C) 2.5.
• D) 0.4.

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Definitions:

Security Agreement

An agreement that creates or provides for a security interest between the debtor and a secured party.

Nonnegotiable

An item or condition that cannot be altered or discussed for change.

Three-Party Instrument

A financial document or contract involving three parties, where one party is typically promised payment by another, with the third acting as a guarantor or intermediary.

Payment Fund

A reserve of money that is set aside to cover future payments, debts, or expenses.